Correlation Between HUMANA and First National

Can any of the company-specific risk be diversified away by investing in both HUMANA and First National at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HUMANA and First National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HUMANA INC and First National of, you can compare the effects of market volatilities on HUMANA and First National and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HUMANA with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of HUMANA and First National.

Diversification Opportunities for HUMANA and First National

-0.29

Correlation Coefficient

HUMANA  First National

Very good diversification

The 3 months correlation between HUMANA and First is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding HUMANA INC and First National of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National and HUMANA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HUMANA INC are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National has no effect on the direction of HUMANA i.e., HUMANA and First National go up and down completely randomly.

Pair Corralation between HUMANA and First National

Assuming the 90 days trading horizon HUMANA INC is expected to generate 43.33 times more return on investment than First National. However, HUMANA is 43.33 times more volatile than First National of. It trades about 0.07 of its potential returns per unit of risk. First National of is currently generating about 0.0 per unit of risk. If you would invest  7,891  in HUMANA INC on September 12, 2024 and sell it today you would lose (196.00) from holding HUMANA INC or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.52%
Values	Daily Returns

HUMANA INC  vs.  First National of

HUMANA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HUMANA INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for HUMANA INC investors.

First National

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First National of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First National is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HUMANA and First National

The main advantage of trading using opposite HUMANA and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HUMANA position performs unexpectedly, First National can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First National will offset losses from the drop in First National's long position.

The idea behind HUMANA INC and First National of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.